CUSTOMER AGREEMENT
THIS CUSTOMER AGREEMENT (this "Agreement"), made as of
the 1st day of December, 1997, by and among DEAN WITTER
DIVERSIFIED FUTURES FUND II L.P., a Delaware limited partnership
(the "Customer"), CARR FUTURES INC., a Delaware corporation
("CFI"), and DEAN WITTER REYNOLDS INC., a Delaware corporation
("DWR");
W I T N E S S E T H :
WHEREAS, the Customer was organized pursuant to a
Certificate of Limited Partnership filed in the office of the
Secretary of State of the State of Delaware on September 6, 1988,
and a Limited Partnership Agreement dated as of September 6,
1988, between Demeter Management Corporation, a Delaware
corporation ("Demeter"), acting as general partner (in such
capacity, the "General Partner"), and the limited partners of the
Customer, to trade, buy, sell, spread, or otherwise acquire,
hold, or dispose of commodities (including foreign currencies,
mortgage-backed securities, money market instruments, and any
other securities or items which are, or may become, the subject
of futures contract trading), commodity futures contracts,
commodity forward contracts, foreign exchange commitments,
options on physical commodities and on futures contracts, spot
(cash) commodities and currencies, and any rights pertaining
thereto (hereinafter referred to collectively as "futures
interests"), and securities (such as United States Treasury
bills) approved by the Commodity Futures Trading Commission (the
"CFTC") for investment of customer funds;
WHEREAS, the Customer (which is a commodity pool) and
the General Partner (which is a registered commodity pool
operator) have entered into a management agreement (the
"Management Agreement") with a certain trading advisor (the
"Trading Advisor"), which provides that the Trading Advisor has
authority and responsibility, except in certain limited
situations, to direct the investment and reinvestment of the
assets of the Customer in futures interests under the terms set
forth in the Management Agreement;
WHEREAS, the Customer and DWR have entered into that
certain Amended and Restated Customer Agreement, dated as of
December 1, 1997 (the "DWR Customer Agreement"), whereby DWR
agreed to perform certain non-clearing futures interests
brokerage and other services for the Customer; and
WHEREAS, the Customer, DWR and CFI wish to enter into
this Agreement to set forth the terms and conditions upon which
CFI will perform futures interests execution and clearing
services for the Customer;
NOW, THEREFORE, the parties hereto hereby agree as
follows:
1. Duties of CFI. CFI agrees to execute and clear
all futures interests brokerage transactions on behalf of the
Customer in accordance with instructions provided by DWR, Demeter
or the Trading Advisor, and the Customer agrees to retain CFI as
its clearing broker for the term of this Agreement. CFI agrees
to maintain such number of subaccounts for the Customer as DWR
reasonably shall request. The execution and clearing services of
CFI provided hereunder shall be in accordance with applicable
exchange rules.
CFI agrees to furnish to the Customer as soon as
practicable all of the information from time to time in its
possession which Demeter, as the general partner of the Customer,
is required to furnish to the Limited Partners pursuant to the
Limited Partnership Agreement as from time to time in effect and
as required by applicable law, rules, or regulations. CFI shall
disclose such information (including, without limitation,
financial statements) regarding itself and its affiliates as may
be required by the Customer for SEC, CFTC and state blue sky
disclosure purposes.
CFI agrees to notify the applicable Trading Advisor and
DWR immediately upon discovery of any error committed by CFI or
any of its agents with respect to a trade executed or cleared by
CFI on behalf of the Customer and to notify DWR promptly of any
order or trade for the Customer's account which CFI believes was
not executed or cleared in accordance with proper instructions
given by DWR, Demeter or any Trading Advisor or other agent for
the Customer's account. Notwithstanding any provision of this
Agreement to the contrary, CFI shall assume financial
responsibility for any errors committed or caused by it in
executing or clearing orders for the purchase or sale of futures
interests for the Customer's account and shall credit the
Customer's account with any profit resulting from an error of
CFI. Errors made by floor brokers appointed or selected by CFI
shall constitute errors made by CFI. However, CFI shall not be
responsible for errors committed by the Trading Advisor.
CFI acknowledges that other partnerships of which the
General Partner is the general partner are not affiliates of the
Customer.
2. Margins. The futures and futures option trades
for the Customer's account shall be margined at the applicable
exchange or clearinghouse minimum rates for speculative accounts;
all subaccounts shall be combined for determining such margin
requirements. All margin calls for the Customer's account shall
be made to DWR by CFI, and each such call for margin shall be met
by Customer within three hours after DWR has received such call.
CFI shall accept as margin for the Customer's account any
instrument deemed acceptable under exchange or clearinghouse
rules pertaining to such account. Upon oral or written request
by DWR, CFI shall, within three hours after receipt of any such
request, wire transfer (by federal bank wire system) to DWR for
Customer's account any funds in the Customer's account with CFI
in excess of the margin requirements for such account.
3. Obligations and Expenses. Except as otherwise set
forth herein, the Customer, and not CFI, shall be responsible for
all taxes, management and incentive fees to the Trading Advisor,
the brokerage commissions to DWR pursuant to the DWR Customer
Agreement, and all extraordinary expenses incurred by it.
4. Agreement Nonexclusive. CFI shall be free to
render services of the nature to be rendered to the Customer
hereunder to other persons or entities in addition to the
Customer, and the parties acknowledge that CFI may render such
services to additional entities similar in nature to the
Customer, including other partnerships organized with Demeter as
their general partner. It is expressly understood and agreed
that this Agreement is nonexclusive and that the Customer has no
obligation to execute any or all of its trades for futures
interests through CFI. The parties acknowledge that the Customer
may execute and clear trades for futures interests through such
other broker or brokers as Demeter may direct from time to time.
The Customer's utilization of an additional commodity broker
shall neither terminate this Agreement nor modify in any regard
the respective rights and obligations of the Customer and CFI
hereunder.
5. Compensation of CFI. In compensation of CFI's
services pursuant to this Agreement, the Customer shall pay CFI
all NFA fees, clearinghouse fees, exchange fees or other
regulatory fees, taxes (other than income taxes), floor brokerage
fees, third-party clearing fees and give-up fees. DWR shall pay
to CFI such charges with respect to the execution and clearance
of trades for the Customer as DWR and CFI shall agree from time
to time. Subject to the brokerage commission and transaction
fees and costs caps set forth in the DWR Customer Agreement, DWR
shall have no obligation to reimburse the Customer for any
payments made by the Customer to CFI. The Customer shall have no
obligation to reimburse DWR for any payments made by DWR to CFI.
6. Investment Discretion. The parties recognize that
CFI shall have no authority to direct the futures interests
investments to be made for the Customer's account, but shall
execute only such orders for the Customer's account as DWR,
Demeter or the Trading Advisor may direct from time to time.
However, the parties agree that CFI, and not the Trading Advisor,
shall have the authority and responsibility with regard to the
investment, maintenance, and management of the Customer's assets
that are held in segregated or secured accounts, as provided in
Section 7 hereof.
7. Interest on Customer Funds. The Customer's assets
deposited with CFI will be segregated or secured in accordance
with the Commodity Exchange Act and CFTC regulations. All of
such funds will be available for margin for the Customer's
trading. CFI shall pay to DWR such interest income on the
Customer's assets held by CFI as CFI and DWR shall agree from
time to time. The Customer understands that it will not receive
any interest income on its assets held by CFI other than that
paid by DWR pursuant to the DWR Customer Agreement. The
Customer's assets held by CFI may be used solely as margin for
the Customer's trading.
8. Recording Conversations. CFI consents to the
electronic recording, at the discretion of the Customer,
Customer's agents or DWR, of any or all telephone conversations
with CFI (without automatic tone warning device), the use of same
as evidence by either party in any action or proceeding arising
out of this Agreement, and in the Customer's, Customer's agents'
or DWR's erasure, at its discretion, of any recording as a part
of its regular procedure for handling of recordings.
9. Delivery; Option Exercise.
(a) The Customer acknowledges that the making or
accepting of delivery pursuant to a futures contract may involve
a much higher degree of risk than liquidating a position by
offset. CFI has no control over and makes no warranty with
respect to grade, quality or tolerances of any commodity
delivered in fulfillment of a contract.
(b) The Customer agrees to give CFI timely notice and
immediately on request to inform CFI if the Customer intends to
make or take delivery under a futures contract or to exercise an
option contract. If so requested, the Customer shall provide CFI
with satisfactory assurances that the Customer can fulfill the
Customer's obligation to make or take delivery under any
contract. The Customer shall furnish CFI with property
deliverable by it under any contract in accordance with CFI's
instructions.
(c) CFI shall not have any obligation to exercise any
long option contract unless the Customer has furnished CFI with
timely exercise instructions and sufficient initial margin with
respect to each underlying futures contract.
10. Standard of Liability and Indemnity. Subject to
Section 1 hereof, CFI and its affiliates (as defined below) shall
not be liable to the Customer, the General Partner or Limited
Partners, or any of its or their respective successors or
assigns, for any act, omission, conduct, or activity undertaken
by or on behalf of the Customer pursuant to this Agreement which
CFI determines, in good faith, to be in the best interests of the
Customer, unless such act, omission, conduct, or activity by CFI
or its affiliates constituted misconduct or negligence.
The Customer shall indemnify, defend and hold harmless
CFI and its affiliates from and against any loss, liability,
damage, cost or expense (including attorneys' and accountants'
fees and expenses incurred in the defense of any demands, claims,
or lawsuits) actually and reasonably incurred arising from any
act, omission, conduct, or activity undertaken by CFI on behalf
of the Customer pursuant to this Agreement, including, without
limitation, any demands, claims or lawsuits initiated by a
Limited Partner (or assignee thereof), provided that (i) CFI has
determined, in good faith, that the act, omission, conduct, or
activity giving rise to the claim for indemnification was in the
best interests of the Customer, and (ii) the act, omission,
conduct, or activity that was the basis for such loss, liability,
damage, cost, or expense was not the result of misconduct or
negligence. Notwithstanding anything to the contrary contained
in the foregoing, neither CFI nor any of its affiliates shall be
indemnified by the Customer for any losses, liabilities, or
expenses arising from or out of an alleged violation of federal
or state securities laws unless (a) there has been a successful
adjudication on the merits of each count involving alleged
securities law violations as to the particular indemnitee, or (b)
such claims have been dismissed with prejudice on the merits by a
court of competent jurisdiction as to the particular indemnitee,
or (c) a court of competent jurisdiction approves a settlement of
the claims against the particular indemnitee and finds that
indemnification of the settlement and related costs should be
made, provided, with regard to such court approval, the
indemnitee must apprise the court of the position of the SEC, and
the positions of the respective securities administrators of
Massachusetts, Missouri, Tennessee and/or those other states and
jurisdictions in which the plaintiffs claim they were offered or
sold Units, with respect to indemnification for securities laws
violations before seeking court approval for indemnification.
Furthermore, in any action or proceeding brought by a Limited
Partner in the right of the Customer to which CFI or any
affiliate thereof is a party defendant, any such person shall be
indemnified only to the extent and subject to the conditions
specified in the Delaware Revised Uniform Limited Partnership
Act, as amended, and this Section 10. The Customer shall make
advances to CFI or its affiliates hereunder only if: (i) the
demand, claim, lawsuit, or legal action relates to the
performance of duties or services by such persons to the
Customer; (ii) such demand, claim, lawsuit, or legal action is
not initiated by a Limited Partner; and (iii) such advances are
repaid, with interest at the legal rate under Delaware law, if
the person receiving such advance is ultimately found not to be
entitled to indemnification hereunder.
CFI shall indemnify, defend and hold harmless the
Customer and its successors or assigns from and against any
losses, liabilities, damages, costs or expenses (including in
connection with the defense or settlement of claims; provided CFI
has approved such settlement) incurred as a result of the
activities of CFI or its affiliates, provided, further, that the
act, omission, conduct, or activity giving rise to the claim for
indemnification was the result of bad faith, misconduct or
negligence.
The indemnities provided in this Section 10 by the
Customer to CFI and its affiliates shall be inapplicable in the
event of any losses, liabilities, damages, costs, or expenses
arising out of, or based upon, any material breach of any
warranty, covenant, or agreement of CFI contained in this
Agreement to the extent caused by such breach. Likewise, the
indemnities provided in this Section 10 by CFI to the Customer
and any of its successors and assigns shall be inapplicable in
the event of any losses, liabilities, damages, costs, or expenses
arising out of, or based upon, any material breach of any
warranty, covenant, or agreement of the Customer contained in
this Agreement to the extent caused by such breach.
As used in this Section 10, the term "affiliate" of CFI
shall mean: (i) any natural person, partnership, corporation,
association, or other legal entity directly or indirectly owning,
controlling, or holding with power to vote 10% or more of the
outstanding voting securities of CFI; (ii) any partnership,
corporation, association, or other legal entity 10% or more of
whose outstanding voting securities are directly or indirectly
owned, controlled, or held with power to vote by CFI; (iii) any
natural person, partnership, corporation, association, or other
legal entity directly or indirectly controlling, controlled by,
or under common control with, CFI; or (iv) any officer or
director of CFI. Notwithstanding the foregoing, "affiliates" for
purposes of this Section 10 shall include only those persons
acting on behalf of CFI within the scope of the authority of CFI,
as set forth in this Agreement.
11. Term. This Agreement shall continue in effect
until terminated by any party giving not less than 60 days' prior
written notice of termination to the other parties. The Customer
shall have the right to terminate this Agreement
(i) at any time, effective upon thirty (30) days'
prior written notice to CFI, in the event that:
(A) CFI announces plans to discontinue the
provision of execution and clearing
services with respect to futures
contracts, options on futures contracts
or acting as a dealer counterparty for
foreign exchange cash and forward
contracts; or
(B) CFI merges or consolidates with or into
or acquires or is acquired by, another
entity or entities acting in concert
(excluding any intergroup
reorganizations with any affiliates of
CFI or any capital contributions by, or
sale of CFI stock to any affiliates of
CFI, provided that the guarantee
agreement between DWR and Credit
Agricole Indosuez S.A. dated as of July
31, 1997 remains in place or a
comparable guaranty is substituted by a
bank with a net worth and credit rating
equal to Credit Agricole Indosuez S.A.)
in a transaction involving the purchase
or sale of stock or substantially all of
the assets of the acquired entity or
which involves a capital contribution to
or by such entity
or entities (in an amount representing
fifty percent (50%) or more of the book
value of CFI's or such entity's (or
their respective affiliate's) net
worth), or the purchase or sale of stock
representing fifty percent (50%) or more
of CFI's or such entity's (or their
respective affiliate's) outstanding
equity securities; and
(ii) at any time effective immediately upon
written notice to CFI in the event:
(A) CFI ceases to be registered or conduct
business as a futures commission
merchant or discontinues its membership
or clearing membership on any major
futures interest exchange in the United
States (or any affiliated clearing
corporation) or in the NFA; or
(B) a receiver, liquidator or trustee of CFI
is appointed by court order and such
order remains in effect for more than
thirty (30) days; or CFI is adjudicated
bankrupt or insolvent; or any of CFI's
property is sequestered by court order
and such order remains in effect for
more than thirty (30) days; or a
petition is filed against CFI under any
bankruptcy, reorganization, arrangement,
insolvency, readjustment or debt,
dissolution or liquidation law of any
jurisdiction, whether now or hereafter
in effect, and is not dismissed within
thirty (30) days after such filing; or
CFI files a petition in voluntary
bankruptcy or seeking relief under any
provision of any bankruptcy,
reorganization, arrangement, insolvency,
readjustment of debt, dissolution or
liquidation law of any jurisdiction,
whether now or hereafter in effect, or
consents to the filing of any petition
against it under any such law; or
(C) CFI, DWR or the Customer is ordered or
otherwise directed to terminate this
Agreement by any governmental,
regulatory, or self-regulatory
authority.
Any such termination by any party shall be without penalty.
12. Complete Agreement. This Agreement constitutes
the entire agreement among the parties with respect to the
matters referred to herein, and no other agreement, verbal or
otherwise, shall be binding as among the parties unless in
writing and signed by the party against whom enforcement is
sought.
13. Assignment. This Agreement may not be assigned by
any party without the express written consent of the other
parties.
14. Amendment. This Agreement may not be amended except by the
written consent of the parties.
15. Notices. All notices required or desired to be
delivered under this Agreement shall be in writing and shall be
effective when delivered personally on the day delivered, or when
given by registered or certified mail, postage prepaid, return
receipt requested, on the day of receipt, addressed as follows
(or to such other address as the party entitled to notice shall
hereafter designate in accordance with the terms hereof):
if to the Customer:
DEAN WITTER DIVERSIFIED FUTURES FUND II L.P.
c/o Demeter Management Corporation
Two World Trade Center, 62nd Floor
New York, New York 10048
Attn: Mark J. Hawley
President
if to DWR:
DEAN WITTER REYNOLDS INC.
Two World Trade Center, 62nd Floor
New York, New York 10048
Attn: Mark J. Hawley
Executive Vice President
if to CFI:
CARR FUTURES INC
10 South Wacker Drive, Suite 1125
Chicago, Illinois 60606
Attn: Legal/Compliance Department
16. Survival. The provisions of this Agreement shall
survive the termination of this Agreement with respect to any
matter arising while this Agreement was in effect.
17. Headings. Headings of Sections herein are for the
convenience of the parties only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.
18. Incorporation by Reference. The Futures Account
Agreement annexed hereto is hereby incorporated by reference
herein and made a part hereof to the same extent as if such
document were set forth in full herein. If any provision of this
Agreement is or at any time becomes inconsistent with the annexed
document, the terms of this Agreement shall control.
19. Governing Law; Venue. This Agreement shall be
governed by, and construed in accordance with, the law of the
State of New York (without regard to its choice of law
principles). If any action or proceeding shall be brought by a
party to this Agreement or to enforce any right or remedy under
this Agreement, each party hereto hereby consents and will submit
to the jurisdiction of the courts of the State of New York or any
federal court sitting in the County, City and State of New York.
Any action or proceeding brought by any party to this Agreement
to enforce any right, assert any claim, or obtain any relief
whatsoever in connection with this Agreement shall be brought by
such party exclusively in the courts of the State of New York or
any federal court sitting in the County, City and State of New
York.
IN WITNESS WHEREOF, this Agreement has been executed
for and on behalf of the undersigned as of the day and year first
above written.
DEAN WITTER DIVERSIFIED FUTURES
FUND II L.P.
By: Demeter Management Corporation,
General Partner
By: /s/ Mark J. Hawley
Mark J. Hawley
President
DEAN WITTER REYNOLDS INC.
By: /s/ Mark J. Hawley
Mark J. Hawley
Executive Vice President
CARR FUTURES INC.
By: /s/ Lawrence P. Anderson
Name: Lawrence P. Anderson
Title: Executive Vice President
CARR FUTURES INC.
FUTURES ACCOUNT AGREEMENT
In consideration of the acceptance by Carr Futures Inc. ("Carr")
of one or more accounts of the undersigned ("Customer") (if more
than one account is at any time opened or reopened with Carr, all
are covered by this Agreement and are referred to individually
and collectively as the "Account"), and Carr's agreement to act
as broker, directly or indirectly, or as dealer, for the
execution, clearance and/or carrying of transactions for the
purchase and sale of commodity interests, including commodities,
forward contracts, commodity futures contracts, options on
commodity futures contracts and transaction involving the
exchange of futures for cash commodities or the exchange of
futures in connection with cash commodity transactions, Customer
agrees as follows:
1. APPLICABLE RULES AND REGULATIONS
The Account and each transaction therein shall be subject to
the terms of this Agreement and to (a) all applicable laws
and the regulations, rules and orders (collectively
"regulations") of all regulatory and self-regulatory
organizations having jurisdiction and (b) the constitution,
by-laws, rules, regulations, orders, resolutions,
interpretations and customs and usages (collectively
"rules") of the market and any associated clearing
organization (each an "exchange") on or subject to the rules
of which such transaction is executed and/or cleared. The
reference in the preceding sentence to exchange rules is
solely for Carr's protection and Carr's failure to comply
therewith shall not constitute a breach of this Agreement or
relieve Customer of any obligation or responsibility under
this Agreement. Carr shall not be liable to Customer as a
result of any action by Carr, its officers, directors,
employees or agents to comply with any rule or regulation.
2. PAYMENTS TO CARR
Customer agrees to pay to Carr immediately on request (a)
commissions, give-up charges, fees and service charges as
are in effect from time to time, together with all
applicable regulatory and self-regulatory organization and
exchange fees, charges and taxes; (b) the amount of any
debit balance or any other liability that may result from
transactions executed for the Account; and (c) interest on
such debit balance or liability at the prevailing rate
charged by Carr at the time such debit balance or liability
arises and service charges on any such debit balance or
liability together with any reasonable costs and attorneys'
fees incurred in collecting any such debit balance or
liability. Customer acknowledges that Carr may charge
commissions at other rates to other customers.
3. CUSTOMER'S DUTY TO MAINTAIN ADEQUATE MARGIN
Customer shall at all times, and without prior notice or
demand from Carr, maintain adequate margin (also known as
"performance bond") in the Account so as to continually to
meet the original and maintenance margin requirements
established by Carr for Customer. Carr may change such
requirements from time to time at Carr's discretion. Such
margin requirements may exceed the margin requirements set
by any exchange or
other regulatory authority and may vary from Carr's
requirements for other customers. Customer agrees, when so
requested, orally or by written notice, immediately (in no
less than one hour) to wire transfer (by federal bank wire
system to the account of Carr) margin funds, and to furnish
Carr with names of bank officers for immediate verification
of such transfers. Customer acknowledges and agrees that
Carr may receive and retain as its own any interest,
increment, profit, gain or benefit, directly or indirectly,
accruing from any of the funds Carr receives from Customer.
4. DELIVERY; OPTION EXERCISE
Liquidating instructions on open positions maturing in a
current delivery month must be given to Carr at least five
business days prior to the first notice day in the case of
long positions, and at least five business days prior to the
last trading day in the case of short positions.
Alternatively, sufficient funds to take delivery or the
necessary delivery documents must be delivered to Carr
within the same period described above. If funds, documents
or instructions are not received, Carr may, without notice,
either liquidate Customer's position or make or receive
delivery on behalf of Customer upon such terms and by such
methods as Carr, in its sole discretion, determines.
If, at any time, Customer fails to deliver to Carr any
property previously sold by Carr on Customer's behalf in
compliance with commodity interest contracts, or Carr shall
deem it necessary (whether by reason of the requirements of
any exchange, clearing house or otherwise) to replace any
securities, commodity interest contracts, financial
instruments, or other property previously delivered by Carr
for the Account of Customer with other property of like or
equivalent kind or amount, Customer hereby authorizes Carr,
in its sole judgment, to borrow or to buy any property
necessary to make delivery thereof, or to replace any such
property previously delivered, or to deliver the same to
such other party or to whom delivery is to be made. Carr
may subsequently repay any borrowing or purchase thereof
with property purchased or otherwise acquired for the amount
of Customer. Customer shall pay Carr for any cost, loss and
damages from the foregoing, including, but not limited to,
consequential damages, penalties and fines which Carr may
incur or which Carr may sustain from its inability to borrow
or buy any such property.
Customer understands that some exchanges and clearing houses
have established cut-off times for the tender of exercise
instructions, and that an option will become worthless if
instructions are not delivered before such expiration time.
Customer also understands that certain exchanges and
clearing houses automatically will exercise some "in-the-
money" options unless instructed otherwise. Customer
acknowledges full responsibility for taking action either to
exercise or to prevent the exercise of an option contract,
as the case may be, and Carr is not required to take any
action with respect to an option contract, including without
limitations any action to exercise an option prior to its
expiration date, or to prevent the automatic exercise of an
option, except upon Customer's express instructions.
Customer further understands that Carr may establish
exercise cut-off times which may be different from the times
established by exchanges and clearing houses.
Customer understands that (a) all short option positions are
subject to assignment at any time, including positions
established on the same day that exercises are assigned, and
(b) exercised assignment notices are allocated randomly from
among all Carr customer's short options positions which are
subject to exercise. A more detailed description of Carr's
allocation procedures is available upon request.
5. FOREIGN CURRENCY
If Carr enters into any transaction for Customer effected in
a currency other than U.S. dollars: (a) any profit or loss
caused by changes in the rate of exchange for such currency
shall be for Customer's Account and risk and (b) unless
another currency is designated in Carr's confirmation of
such transaction, all margin for such transaction and the
profit or loss on the liquidation of such transaction shall
be in U.S. dollars at a rate of exchange determined by Carr
in its discretion on the basis of then prevailing market
rates of exchange for such foreign currency.
6. CARR MAY LIMIT POSITIONS HELD
Customer agrees that Carr, at its discretion, may limit the
number of open positions (net or gross) which Customer may
execute, clear and/or carry with or acquire through it.
Customer agrees (a) not to make any trade which would have
the effect or exceeding such limits, (b) that Carr may
require Customer to reduce open positions carried with Carr
and (c) that Carr may refuse to accept orders to establish
new positions. Carr may impose and enforce such limits,
reduction or refusal whether or not they are required by
applicable law, regulations or rules. Customer shall comply
with all position limits established by any regulatory or
self-regulatory organization or any exchange. In addition,
Customer agrees to notify Carr promptly if Customer is
required to file position reports with any regulatory or
self-regulatory organization or with any exchange.
7. NO WARRANTY AS TO INFORMATION OR RECOMMENDATION
Customer acknowledges that:
(a) Any market recommendations and information Carr may
communicate to Customer, although based upon information obtained
from sources believed by Carr to be reliable, may be incomplete
and not subject to verification;
(b) Carr makes no representation, warranty or guarantee as to,
and shall not be responsible for, the accuracy or completeness of
any information or trading recommendation furnished to Customer;
(c) Recommendations to Customer as to any particular transaction
at any given time may differ among Carr's personnel due to
diversity in analysis of fundamental and technical factors and
may vary from any standard recommendation made by Carr in its
research reports or otherwise; and
(d) Carr has no obligation or responsibility to update any
market recommendations, research or information it communicates
to Customer.
Customer understands that Carr and its officers, directors,
affiliates, stockholders, representatives or associated
persons may have positions in and may intend to buy or sell
commodity interests that are the subject of market
recommendations furnished to Customer, and that the market
positions of Carr or any such officer, director, affiliate,
stockholder, representative or associated person may or may
not be consistent with the recommendations furnished to
Customer by Carr.
8. LIMITS ON CARR DUTIES; LIABILITY
Customer agrees:
(a) That Carr has no duty to apprise Customer of news or of the
value of any commodity interests or collateral pledged or in any
way to advise Customer with respect to the market;
(b) That the commissions which Carr receives are consideration
solely for the execution, reporting and carrying of Customer's
trades;
(c) If there is an Account Manager, an Account Manager's
Agreement for the Account Manager will be provided to Carr.
Customer represents it has received: (1) a disclosure document
concerning such Account Manager's trading advice, including, in
the event the Account Manager will trade options, the options
strategies to be utilized, or (2) a written statement explaining
why Account Manager is not required under applicable law to
provide such a disclosure document to Customer; and
(d) Customer acknowledges, understands and agrees that Carr is
in no way responsible for any loss to Customer occasioned by the
actions of the Account Manager and Carr does not by implication
or otherwise endorse the operating methods or trading strategies
or programs of the Account Manager.
9. EXTRAORDINARY EVENTS
Customer agrees that Carr shall have no liability for
damages, claims, losses or expenses caused by any errors,
omissions or delays resulting from an act, condition or
cause beyond the reasonable control of Carr, including, but
not limited to: war; insurrection; riot; strike; act of
God; fire; flood; extraordinary weather conditions;
accident; action of government authority; action of
exchange, clearinghouse or clearing organization;
communications or power failure; equipment or software
malfunction; error, omission or delay in the report of
transactions; prices, exchange rates or other market or
transaction information; or the insolvency, bankruptcy,
receivership, liquidation or other financial difficulty of
any bank, clearing broker, exchange, market, clearinghouse
or clearing organization.
10. INDEMNIFICATION OF CARR, CONTRIBUTION AND REIMBURSEMENT
(a) To the extent permitted by law, Customer agrees to indemnify
and hold harmless Carr and its shareholders, directors, officers,
employees, agents, affiliates and controlling persons against any
liability for damages, claims, losses or expenses which they may
incur as the result of: (x) Customer's violation of federal or
state laws or regulations, or of rules of any exchange or self-
regulatory organization; (y) any other breach of this Agreement
by Customer; or (z) any breach by Carr of federal or state laws
or regulations, or of the charter provisions, by-laws, rules,
margin or other requirements, of the exchanges or self-regulatory
organizations, provided that such violation was caused by Carr's
acting in good faith on Customer's behalf. Such damages, claims,
losses or expenses shall include legal fees and expenses, costs
of settling claims, interest, and fines or penalties imposed by
the exchanges, self-regulatory organization or governmental
authority.
(b) Customer agrees that if the indemnification provided in
paragraph (a) above is held to be unavailable to Carr, the
parties hereto shall share in and contribute to such damages,
claims, losses or expenses in proportion to their relative
benefits from the transactions involved and their relative degree
of fault in causing the liability.
(c) Customer agrees to reimburse Carr and its shareholders,
directors, officers, employees, agents, affiliates and
controlling persons on demand for any costs incurred in
collecting any sums Customer owes under this Agreement and any
costs of successfully defending against claims asserted against
them by Customer.
11. NOTICES; TRANSMITTALS
Carr shall transmit all communications to Customer at
Customer's address, facsimile or telephone number set forth
below or to such other address as Customer may hereafter
direct in writing. Customer shall transmit all
communications to Carr regarding this Agreement (except
routine inquiries concerning the Account) to 10 South Wacker
Drive, Suite 1100, Chicago, Illinois 60606; facsimile, (312)
441-4201, Attention: Legal/Compliance Department. All
payments and deliveries to Carr shall be made as instructed
by Carr from time to time and shall be deemed received only
when actually received by Carr.
12. CONFIRMATION CONCLUSIVE
Confirmation of trades and any other notices sent to
Customer shall be conclusive and binding on Customer unless
customer or Customer's agent notifies Carr to the contrary
(a) in the case of an oral report, orally at the time
received by Customer or its agent; or (b) in the case of a
written report or notice, in writing prior to opening of
trading on the business day next following receipt of the
report. In addition, if Customer has not received a written
confirmation that a commodity interest transaction has been
executed within three business days after Customer has
placed an order with Carr to effect such
transaction, and has been informed or believes that such
order has been or should have been executed, then Customer
immediately shall notify Carr thereof. Absent such notice,
Customer conclusively shall be deemed estopped to object and
to have waived any such objection to the failure to execute
or cause to be executed such transaction. Anything in this
Section 12 notwithstanding, neither Customer nor Carr shall
be bound by any transaction or price reported in error.
13. SECURITY INTEREST
Customer hereby grants to Carr a first lien upon and a
security interest in any and all cash, securities, whether
certificated or uncertificated, security entitlements,
investment property, financial assets, foreign currencies,
commodity interests and other property (including securities
and options) and the proceeds of all of the foregoing
(together the "Collateral") belonging to Customer or in
which Customer may have an interest, now or in the future,
and held by Carr or in Carr's control or carried in any of
Customer's Accounts, or in Customer's accounts carried under
other agreements with Carr or its affiliates. Such security
interest is granted as security for the performance by
Customer of its obligations hereunder and for the payment of
all loans and other liabilities which Customer has or may in
the future have to Carr, whether under this Agreement or any
other agreement between the parties hereto. Customer agrees
to execute such further instruments, documents, filings and
agreements as may be requested at any time by Carr in order
to perfect and maintain perfected the foregoing lien and
security interest. Carr, in its discretion, may liquidate
any Collateral to satisfy any margin or Account deficiencies
or to transfer the Collateral to the general ledger account
of Carr.
In the event that the provisions of Section 13, which relate
to Collateral in any account carried by Carr for Customer
other than an Account instituted hereunder, conflict with
the agreement under which such other account was instituted,
such other agreement between Carr and Customer shall take
precedence over the provisions of this Section 13.
14. TRANSFER OF FUNDS
At any time and from time to time and without prior notice
to Customer, Carr may transfer from one Account to another
Account in which Customer has any interest, such excess
funds, equities, securities or other property as in Carr's
judgment may be required for margin, or to reduce any debit
balance or to reduce or satisfy any deficits in such other
Accounts except that no such transfer may be made from a
segregated Account subject to the Commodity Exchange Act to
another Account maintained by Customer unless either
Customer has authorized such transfer in writing or Carr is
effecting such transfer to enforce Carr's security interest
pursuant to Section 13. Carr promptly shall confirm all
transfers of funds made pursuant hereto to Customer in
writing.
15. CARR'S RIGHT TO LIQUIDATE CUSTOMER POSITIONS
In addition to all other rights of Carr set forth in this
Agreement:
(a) When directed or required by a regulatory or self-regulatory
organization or exchange having jurisdiction over Carr or the
Account;
(b) Whenever Carr reasonably considers it necessary for its
protection because of margin requirements or otherwise;
(c) If Customer or any affiliate of Customer repudiates,
violates, breaches or fails to perform on a timely basis any
term, covenant or condition on its part to be performed under
this Agreement or another agreement with Carr;
(d) If a case in bankruptcy is commenced or if a proceeding
under any insolvency or other law for the protection of creditors
or for the appointment of a receiver, liquidator, trustee,
conservator, custodian or similar officer is filed by or against
Customer or any affiliate of Customer, or if Customer or any
affiliate of Customer makes or proposes to make any arrangement
or composition for the benefit of its creditors, or if Customer
(or any such affiliate) or any or all of its property is subject
to any agreement, order, judgment or decree providing for
Customer's dissolution, winding-up, liquidation, merger,
consolidation, reorganization or for the appointment of a
receiver, liquidator, trustee, conservator, custodian or similar
officer of Customer, such affiliate or such property;
(e) Carr is informed of Customer's death or mental incapacity;
or
(f) If an attachment or similar order is levied against the
Account or any other account maintained by a Customer or any
affiliate of Customer with Carr;
Carr shall have the right to (i) satisfy any obligations due
Carr out of any Customer's property (also referred to as
"Collateral") in Carr's custody or control, (ii) liquidate
any or all of Customer's commodity interest positions, such
liquidation shall include transactions involving the
exchange of futures for cash commodities or the exchange of
futures in connection with cash commodity transactions,
(iii) cancel any or all of Customer's outstanding orders,
(iv) treat any or all of Customer's obligations due Carr as
immediately due and payable, (v) sell any or all of
Customer's property in Carr's custody or control in such
manner as Carr determines to be commercially reasonable,
and/or (vi) terminate any or all of Carr's obligations for
future performance to Customer, all without any notice to or
demand on Customer if deemed necessary by Carr. Any sale
hereunder may be made in any commercially reasonable manner.
Customer agrees that a prior demand, call or notice shall
not be considered a waiver of Carr's right to act without
demand or notice as herein provided, that Customer shall at
all times be liable for the payment of any debit balance
owing in each Account upon demand whether occurring upon a
liquidation as provided under this Section 15 or otherwise
under this Agreement, and that in all cases Customer shall
be liable for any deficiency remaining in each
Account in the event of liquidation thereof in whole or in
part together with interest thereon and all costs relating
to liquidation and collection (including reasonable
attorneys' fees). In the event that the provisions of
Section 15, which relate to Collateral in any account
carried by Carr for Customer other than an Account
instituted hereunder, conflict with the agreement under
which such other account was instituted, such other
agreement between Carr and Customer shall take precedence
over the provisions of this Section 15.
16. CUSTOMER REPRESENTATIONS, WARRANTIES AND AGREEMENTS
Customer represents and warrants to and agrees with Carr
that:
(a) Customer has full power and authority to enter into this
Agreement and to engage in the transactions and perform its
obligations hereunder and contemplated hereby, and:
(1) If Customer is a corporation or partnership, Customer
represents and warrants that (a) it is duly organize and in good
standing under the laws of the jurisdiction in which it is
established and in every state in which it does business; (b) is
empowered to enter into and perform this Agreement and to
effectuate transactions in commodity interests, financial
instruments and foreign currency as contemplated hereby; (c) that
Customer has determined that trading in commodity interests is
appropriate for Customer, is prudent in all respects and does not
and will not violate any statute, rule, regulation, judgment or
decree to which Customer is subject or bound; (d) that Customer
has had a least one year's prior experience in effectuating
transactions in commodity interests, financial instruments, and
foreign currency as contemplated hereby; and (e) no person or
entity has any interest in or control of the Account to which
this Agreement pertains except as disclosed by Customer to Carr
in writing.
(2) If Customer is a trust, Customer represents and warrants
that (a) it is a duly formed and existing trust under the laws of
the state of its formation or such other laws as are applicable,
including ERISA or similar state law, and the party or parties
designated as trustee or trustees by Customer to Carr in writing
submitted herewith constitute the only or all of the proper
trustees thereof; (b) the trustee or trustees are empowered to
enter into and perform this Agreement and to effectuate
transactions in commodity interests, financial instruments, and
foreign currency as contemplated hereby; (c) the trustee or
trustees make the representations set forth in Section 1 hereof
as if the term trustee(s) were substituted for the term Customer
therein; and (d) no person or entity has any interest in or
control of the Account to which this Agreement pertains except as
disclosed by Customer to Carr in writing.
(b) Neither Customer nor any partner, director, officer, member,
manager or employee of Customer nor any affiliate of Customer is
a partner, director, officer, member, manager or employee of a
futures commission merchant, introducing broker, bank, broker-
dealer, exchange or self-regulatory organization or an employee
or commissioner of the Commodity Futures Trading Commission (the
"CFTC"), except as previously disclosed in writing to Carr;
(c) Any financial statements or other information furnished in
connection therewith are true, correct and complete. Except as
disclosed in writing, (i) Customer is not a commodity pool or is
exempt from registration under the rules of the CFTC, and (ii)
Customer is acting solely as principal and no one other than
Customer has any interest in any Account of Customer. Customer
hereby authorizes Carr to contact such banks, financial
institutions and credit agencies as Carr shall deem appropriate
for verification of the information contained herein;
(d) Customer has determined that trading in commodity interests
is appropriate for Customer, is prudent in all respects and does
not and will not violate Customer's charter or by-laws (or other
comparable governing document) or any law, rule, regulation,
judgment, decree, order or agreement to which Customer or its
property is subject or bound;
(e) As required by CFTC regulations, Customer shall create,
retain and produce upon request of the applicable contract
market, the CFTC or other regulatory authority documents (such as
contracts, confirmations, telex printouts, invoices an documents
of title) with respect to cash transactions underlying exchanges
of futures for cash commodities or exchange of futures in
connection with cash commodity transactions;
(f) Customer consents to the electronic recording, at Carr's
discretion, of any or all telephone conversations with Carr
(without automatic tone warning device); the use of same as
evidence by either party in any action or proceeding arising out
of the Agreement and in Carr's erasure, at its discretion, of any
recording as part of its regular procedure for handling of
recordings;
(g) Absent a separate written agreement between Customer and
Carr with respect to give-ups, Carr, in its discretion, may, but
shall have no obligation to, accept from other brokers commodity
interest transactions executed by such brokers on an exchange for
Customer and proposed to be "given-up" to Carr for clearance
and/or carrying in the Account;
(h) Carr, for an on behalf of Customer, is authorized and
empowered to place orders for commodity interest transactions
through one or more electronic or automated trading systems
maintained or operated by or under the auspices of an exchange,
that Carr shall not be liable or obligated to Customer for any
loss, damage, liability, cost or expense (including but not
limited to loss of profits, loss of use, incidental or
consequential damages) incurred or sustained by Customer and
arising in whole or in part, directly or indirectly, from any
fault, delay, omission, inaccuracy or termination of a system or
Carr's inability to enter, cancel or modify an order on behalf of
Customer on or through a system. The provisions of this Section
16(h) shall apply regardless of whether any customer claim arises
in contract, negligence, tort, strict liability, breach or
fiduciary obligations or otherwise; and
(i) If Customer is subject to the Financial Institution Reform,
Recovery and Enforcement Act of 1989, the certified resolutions
set forth following this Agreement have been caused to be
reflected in the minutes of Customer's Board of Directors (or
other comparable governing body) and this Agreement is and shall
be, continuously from the date hereof, an official record of
Customer.
Customer agrees to promptly notify Carr in writing if any of
the warranties and representations contained in this Section
16 become inaccurate or in any way cease to be true,
complete and correct.
17. SUCCESSORS AND ASSIGNS
This Agreement shall inure to the benefit of the parties
hereto, their successors and assigns, and shall be binding
upon the parties hereto, their successors and assigns,
provided, however, that this Agreement is not assignable by
any party without the prior written consent of the other
parties..
18. MODIFICATION OF AGREEMENT BY CARR; NON-WAIVER PROVISION
This Agreement may only be altered, modified or amended by
mutual written consent of the parties. The rights and
remedies conferred upon Carr shall be cumulative, and its
forbearance to take any remedial action available to it
under this Agreement shall not waive its right at any time
or from time to time thereafter to take such action.
19. SEVERABILITY
If any term or provision hereof or the application thereof
to any persons or circumstances shall to any extent be
contrary to any exchange, government or self-regulatory
regulation or contrary to any federal, state or local law or
otherwise be invalid or unenforceable, the remainder of this
Agreement or the application of such term or provision to
persons or circumstances other than those as to which it is
contrary, invalid or unenforceable, shall not be affected
thereby.
20. CAPTIONS
All captions used herein are for convenience only, are not a
part of this Agreement, and are not to be used in construing
or interpreting any aspect of this Agreement.
21. TERMINATION
This Agreement shall continue in force until written notice
of termination is given by Customer or Carr. Termination
shall not relieve either party of any liability or
obligation incurred prior to such notice. Upon giving or
receiving notice of termination, Customer will promptly take
all action necessary to transfer all open positions in each
Account to another futures commission merchant.
22. ENTIRE AGREEMENT
This Agreement (as amended by the attached Customer
Agreement dated the date hereof into which this Agreement is
incorporated by reference) constitutes the entire agreement
between Customer and Carr with respect to the subject matter
hereof and supersedes any prior agreements between the
parties with respect to such subject matter.
23. GOVERNING LAW; CONSENT TO JURISDICTION
(a) In case of a dispute between Customer and Carr arising out
of or relating to the making or performance of this Agreement or
any transaction pursuant to this Agreement (i) this Agreement and
its enforcement shall be governed by the laws of the State of
Illinois without regard to principles of conflicts of laws, and
(ii) Customer will bring any legal proceeding against Carr in,
and Customer hereby consents in any legal proceeding by Carr to
the jurisdiction of, any state or federal court located within
Chicago, Illinois, in connection with all legal proceedings
arising directly, indirectly or otherwise in connection with, out
of, related to or from Customer's Account, transactions
contemplated by this Agreement or the breach thereof. Customer
hereby waives all objections Customer, at any time, may have as
to the propriety of the court in which any such legal proceedings
may be commenced. Customer also agrees that any service of
process mailed to Customer at any address specified to Carr shall
be deemed a proper service of process on the undersigned.
Customer agrees that venue of all proceedings shall be in
Chicago, Illinois.
(b) Notwithstanding the provisions of Section 23(a)(ii),
Customer may elect at this time to have all disputes described in
this Section resolved by arbitration. To make such election,
Customer must sign the Arbitration Agreement set forth in Section
24. Notwithstanding such election, any question relating to
whether Customer or Carr has commenced an arbitration proceeding
in a timely manner, whether a dispute is within the scope of the
Arbitration Agreement or whether a party (other than Customer or
Carr) has consented to arbitration and all proceedings to compel
arbitration shall be determined by a court as specified in
Section 23(a)(ii).
24. ARBITRATION AGREEMENT (OPTIONAL)
Every dispute between Customer and Carr arising out of or
relating to the making or performance of this Agreement or
any transaction pursuant to this Agreement, shall be settled
by arbitration in accordance with the rules, then in effect,
of the National Futures Association, the contract market
upon which the transacting giving rise to the claim was
executed, or the National Association of Securities Dealers
as Customer may elect. If Customer does not make such
election by registered mail addressed to Carr at 10 South
Wacker Drive, Suite 1100, Chicago, Illinois 60606,
Attention: Legal/Compliance Department, within 45 days
after demand by Carr that the Customer make such election,
then Carr may make such election. Carr agrees to pay any
incremental fees which may be assessed by a qualified forum
for making available a "mixed panel" of arbitrators, unless
the arbitrators determine that Customer has acted in bad
faith in initiating or conducting the proceedings. Judgment
upon any aware rendered by the arbitrators may be entered in
any court having jurisdiction thereof.
THREE FORUMS EXIST FOR THE RESOLUTION OF COMMODITY DISPUTES:
CIVIL COURT LITIGATION, REPARATIONS AT THE COMMODITY FUTURES
TRADING COMMISSION("CFTC") AND ARBITRATION CONDUCTED BY A
SELF-REGULATORY OR OTHER PRIVATE ORGANIZATION.
THE CFTC RECOGNIZES THAT THE OPPORTUNITY TO SETTLE DISPUTES
BY ARBITRATION MAY IN SOME CASES PROVIDE MANY BENEFITS TO
CUSTOMERS, INCLUDING THE ABILITY TO OBTAIN AN EXPEDITIOUS
AND FINAL RESOLUTION OF DISPUTES WITHOUT INCURRING
SUBSTANTIAL COSTS. THE CFTC REQUIRES, HOWEVER, THAT EACH
CUSTOMER INDIVIDUALLY EXAMINE THE RELATIVE MERITS OF
ARBITRATION AND THAT YOUR CONSENT OT THIS ARBITRATION
AGREEMENT BE VOLUNTARY.
BY SIGNING THIS AGREEMENT, YOU (1) MAY BE WAIVING YOUR RIGHT
TO SUE IN A COURT OF LAW AND (2) ARE AGREEING TO BE BOUND BY
ARBITRATION OF ANY CLAIMS OR COUNTERCLAIMS WHICH YOU OR CARR
MAY SUBMIT TO ARBITRATION UNDER THIS AGREEMENT. YOU
ARE NOT HOWEVER, WAIVING YOUR RIGHT TO ELECT INSTEAD TO
PETITION THE CFTC TO INSTITUTE REPARATIONS PROCEEDINGS UNDER
SECTION 14 OF THE COMMODITY EXCHANGE ACT WITH RESPECT TO ANY
DISPUTE WHICH MAY BE ARBITRATED PURSUANT TO THIS AGREEMENT.
IN THE EVENT A DISPUTE ARISES, YOU WILL BE NOTIFIED IF CARR
INTENDS TO SUBMIT THE DISPUTE TO ARBITRATION. IF YOU
BELIEVE A VIOLATION OF THE COMMODITY EXCHANGE ACT IS
INVOLVED AND IF YOU PREFER TO REQUEST A SECTION 14
"REPARATIONS" PROCEEDINGS BEFORE THE CFTC, YOU WILL HAVE 45
DAYS FROM THE DATE OF SUCH NOTICE IN WHICH TO MAKE THAT
ELECTION.
YOU NEED NOT AGREE TO THIS ARBITRATION AGREEMENT TO OPEN AN
ACCOUNT WITH CARR.
See 17 CFR 1890.1-180.5.
Acceptance of this arbitration agreement requires a separate
signature on page 15.
25. CONSENT TO TAKE THE OTHER SIDE OF ORDERS (OPTIONAL)
Without its prior notice, Customer agrees that when Carr
executes sell or buy orders on Customer's behalf, Carr, its
directors, officers, employees, agents, affiliates, and any
floor broker may take the other side of customer's
transaction through any Account of such person subject to
its being executed a prevailing prices in accordance with
and subject to the limitations and conditions, if any,
contained in applicable rules and regulations.
26. AUTHORIZATION TO TRANSFER FUNDS (OPTIONAL)
Without limiting other provisions herein, Carr is authorized
to transfer from any segregated Account subject to the
Commodity Exchange Act carried by Carr for the Customer to
any other Account carried by Carr for the Customer such
amount of excess funds as in Carr's judgment may be
necessary at any time to avoid a margin call or to reduce a
debit balance in said Account. It is understood that Carr
will confirm in writing each such transfer of funds made
pursuant to this authorization within a reasonable time
after such transfer.
27. ELECTRONIC TRANSMISSION OF STATEMENTS (OPTIONAL)
Customer elects and consents to receive transmission of
statements of transactions and statements of account solely
by electronic means, including without limitation, by
electronic mail or facsimile. Customer shall not incur any
costs or fees in connection with the receipt of such
statements by electronic transmission. Customer shall
receive such statements by electronic transmission until
such time as it revokes its consent in writing to Carr.
28. SUBORDINATION AGREEMENT
(Applies only to Accounts with funds held in foreign
currencies)
Funds of customers trading on United States contract markets
may be held in accounts denominated in a foreign currency
with depositories located outside or inside the United
States or its territories if the customer is domiciled in a
foreign country or if the funds are held in connection with
contracts priced and settled in a foreign currency. Such
accounts are subject to the risk that events could occur
which hinder or prevent the availability of these funds for
distribution to customers. Such accounts also may be
subject to foreign currency exchange rate risks.
If authorized below, Customer authorizes the deposit of
funds into such depositories. For customer domiciled in the
United States, this authorization permits the holding of
funds in regulated accounts only if such funds are used to
margin, guarantee, or secure positions in such contracts or
accrue as a result of such positions. In order to avoid the
possible dilution of other customer funds, a customer agrees
by accepting this subordination agreement that his claims
based on such funds will be subordinated as described below
in the unlikely event both of the following conditions are
met: (1) Carr is placed in receivership or bankruptcy, and
(2) there are insufficient funds available for distribution
denominated in the foreign currency as to which the customer
has a claim to satisfy all claims against those funds.
By initialing the Subordination Agreement below, Customer
agrees that if both of the conditions listed above occur,
its claim against Carr's assets attributable to funds held
overseas in a particular foreign currency may be satisfied
out of segregated customer funds held in accounts
denominated in dollars or other foreign currencies only
after each customer whose funds are held in dollars or in
such other foreign currencies receives its pro-rata portion
of such funds. It is further agreed that in no event may a
customer whose funds are so held receive more than its pro-
rata share of the aggregate pool consisting of funds held in
dollars, funds held in the particular foreign currency, and
non-segregated assets of Carr.
OPTIONAL ELECTIONS/ACKNOWLEDGMENT
The following provisions, which are set forth in this Agreement,
need not be entered into to open the Account. Customer agrees
that its optional elections are as follows:
Signature required for each election
ARBITRATION AGREEMENT
(Agreement Paragraph 24) (Date)
CONSENT TO TAKE THE OTHER SIDE X /s/ Mark J. Hawley
OF ORDERS (Agreement Paragraph 12-1-97
25) (Date)
AUTHORIZATION TO TRANSFER FUNDS
(Agreement Paragraph 26) (Date)
CONSENT TO RECEIVE STATEMENTS
BY ELECTRONIC TRANSMISSION X /s/ Mark J. Hawley
(Agreement Paragraph 27) 12-1-97
(Date)
ACKNOWLEDGMENT OF SUBORDINATION
AGREEMENT (Agreement Paragraph
28) (Required for accounts X /s/ Mark J. Hawley
holding non-U.S. currency) 12-1-97
(Date)
HEDGE ELECTION
Customer confirms that all transactions in the Account will
represent bona fide hedging transactions, as defined by the
Commodity Futures Trading Commission, unless Carr is
notified otherwise not later than the time an order is
placed for the Account:
Pursuant to CFTC Regulation 190.06(d), Customer specifies and
agrees, with respect to hedging transactions in the Account, that
in the unlikely event of Carr's bankruptcy, it prefers that the
bankruptcy trustee [check appropriate box]:
A) Liquidate all open contracts without first seeking
instructions either from or on behalf of Customer.
B) Attempt to obtain instructions with respect to the
disposition of all open contracts.
(If neither box is checks, Customer shall be deemed to elect A).)
ACKNOWLEDGMENT OF RECEIPT OF RISK DISCLOSURE STATEMENTS
The undersigned hereby acknowledges its separate receipt from
Carr, and its understanding of each of the following documents
prior to opening of the Account:
Risk Disclosure Statement for Futures and Options
LME Risk Warning Notice
NYMEX ACCESSSM Risk Disclosure Statement
Globex Customer Information and Risk Disclosure Statement
Project A Customer Information Statement
Questions & Answers on Flexible Options Trading at the CBOT
CME Average Pricing System Disclosure Statement
Special Notice to Foreign Brokers and Foreign Traders
REQUIRED SIGNATURES
CUSTOMER
The undersigned has received, read, understands and agrees to all
the provisions of this Agreement and the separate risk disclosure
statements enumerated above and agrees to promptly notify Carr in
writing if any of the warranties and representations contained
herein become inaccurate or in any way cease to be true, complete
and correct.
DEAN WITTER PRINCIPAL PLUS FUND MANAGEMENT L.P.
Customer name(s)
By: Demeter Management Corporation
By:_ /s/ Mark J. Hawley ______________________________
December 1, 1997
Authorized signature(s) Date
Mark J. Hawley, President
[If applicable, print name and title of signatory]
CARR FUTURES INC.
Accepted and Agreed:
Carr Futures Inc.
By: By:
_______________________________ _______________________________
__ __
Title: Title:
_______________________________ _______________________________
_ _
Date: December 1, 1997 Date:
_______________________________
_